Place header for sub dropdown here

Place sub header for sub dropdown here

Subscribe to Our Blog

340B Market Changes & Reform: 4 Facts

By  Leigh Anne Siino Leigh Anne Siino  on 2014-12-18 10:00:00  |  Featured in  Life Sciences
Leigh Anne Siino
Posted By Leigh Anne Siino
in Life Sciences
on 2014-12-18 10:00:00

340B-Market-Changes-and-ReformIs your organization concerned about the upcoming AMP Final Ruling, which is expected to go into effect in the very near future, and the potential 340B market changes that could come with it? The AMP Final Rule will determine how the average manufacturer price is determined for prescription drugs covered by Medicaid and Medicare, but the full implications of this ruling stretch far beyond the pricing structure. The new rule being published in accordance with the American Care Act also stands to affect the 340B Drug Pricing Program, which mandates the provision of discounted prescription drugs to all covered entities and healthcare organizations eligible for the program. Some people have even dubbed it the 340B “Mega” Rule. If you work in the life sciences industry, your organization will undoubtedly be affected in some way. Armed with the right knowledge, though, it will be much easier to make necessary adjustments to prepare for the changes on the horizon.

Why Is It Called the 340B “Mega” Rule?

People are referring to the upcoming changes to the 340B Drug Rebate Program that will come with the new AMP Final Rule as the 340B Mega Rule because these changes affect multiple aspects of this program, and in very drastic ways. The revisions will affect the compliance requirements for contract pharmacies, the definition of “eligible patients,” and the eligibility of hospitals as well as off-site healthcare facilities. The set of rules is still being finalized; however, after multiple delays, passing of the new rule is anticipated soon. Here are four more facts about the 340B program and this proposed Mega Rule that you need to know.

1. AKA “Public Health Service” Act (PHS)

The 340B Drug Pricing Program is also known as the Public Health Service act, or PHS. The program is intended to reduce the price that drug manufacturers can charge to covered entities, in effort to ensure that vulnerable individuals are able to get the prescription drugs they need to stay healthy. While there are several references to different names, it’s beneficial to keep in mind that the 340B, the Medicaid/Medicare Drug Pricing Program and the PHS or the Public Health Service act are all the same thing.

2. Most Covered Entities are Hospitals

With all the chatter about covered entities, it can sometimes be difficult to remember what we’re actually discussing here: hospitals. A large percentage of the drugs dispensed to patients are provided through hospitals, so this new price structure will have perhaps the biggest impact on the pharmaceutical industry. It will now be much more complicated, costly and time consuming for manufacturers to track the discounted drug information and make sure hospitals are reporting everything correctly, which historically hasn’t always necessarily been the case. With the potential for diversion, stock piling and duplicate discounts resulting in the need for additional compliance monitoring and external data analysis, this will be a serious and essential project for manufacturers to undertake.

3. Changes in “Best Price” Calculation

The new rule won’t only affect the calculations for the Average Manufacturer Price; changes in the calculations for “Best Price” are also expected to go into effect with the passing of the AMP Final Rule. Now, calculations will also include sales to 340B covered entities for purchases outside the program. This new granulation of purchasing will affect the way companies structure the architecture of their data and applicable systems, with new requirements for compliance monitoring, additional data sources and updates of the Gross to Net forecast.

4. Increase in Number of Covered Hospitals

In addition to changes in pricing structures, there will also be more hospitals eligible to participate in the 340B Drug Pricing Program. With more hospitals eligible for the discounted pricing, there will be additional costs to report and discounts to track, with less money coming in to cover these costs. This aspect of the new AMP Final Rule and changes to the 340B Drug Pricing Program stands to have the largest potential effect on the pharmaceutical industry of all.

The Insider's Guide to the AMP Final Rule
Leigh Anne Siino

Leigh Anne Siino

Connect with me on 

Leigh Anne Siino is the Finance and Legal Solutions Lead with the Corporate and Enterprise practice at Paragon Solutions. In this role, she supports finance and legal teams at life sciences and healthcare payer organizations by helping them take a more prominent role in maintaining collaboration across business operations, as well as defining a company’s overall strategy. Leigh Anne has a decade of experience in such functional areas as: Finance (Operations and Reporting, Consolidations,) Planning, Budgeting, Forecasting, Enterprise Legal Management, Managed Markets, Gross-to-Net, Trade, Sales and Marketing Operations, Supply Chain, Order and Inventory Management, Contracting and Information Management. She is also an experienced project manager and technical liaison.

View Comments